As if this week couldn’t get any more indecisive / uneventful, today we closed essentially flat once again on little volume. Watching this market make up its mind is like watching the grass grow in the back yard…
So to change things up from posting another index chart with no movement, tonight I have a great chart courtesy of one of my favorite recommended resources, sentimentrader.com. It focuses in on the S&P 100 index and analyzes the open interest put/call ratio. Chart below:
There are currently 176 put options open for every 100 call options on this index. This ratio was not last seen since March and prior to that in 2007 when the market was peaking. The average maximum loss over the next 30 days when we see a level above 1.75 is -5.0% compared to an average maximum gain of +1.9%. Bottom line, the “smart money” is betting this market is going to reverse and historically they are correct more often than not. Let’s see if they are right again.
Stay frosty.
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Up | Up | Up |
| Intermediate | Up | Up | Up |
| Short-term | Up | Up | Up |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
